Off the Charts Blog | Center on Budget and Policy Priorities

News stories and bloggers continue to point to Hale County, Alabama, as the prototypical example of a place where many residents receive federal disability benefits.  But, Hale County is anything but typical.

We think that about one in five Hale County residents between 20 and 64 receives disability benefits from Social Security or Supplemental Security Income, based on data here and here. That’s far above the national average of about one in 16.  We’ve previously pointed out that disability receipt varies by geography.  Several facts make Hale County an outlier:

• An unusual age distribution.  Among Hale County’s working-age population, relatively few are under age 50, and large numbers are aged 50-64 (see chart).  The risk of disability rises sharply with age.  People are roughly twice as likely to be disabled at age 50 as at 40, and twice as likely to be disabled at 60 as at 50.  Hale’s demographics put its population squarely in those high-risk years.

• Low educational attainment.  Hale’s high-school completion rate, at 71 percent, is well below Alabama’s (81.9 percent) and even further below the national average (85.4 percent).  Limited education narrows the kind of work that people can do and their ability to move into other jobs when impairment strikes — which is why the law specifically directs the Social Security Administration to weigh vocational and educational factors for older workers when sifting through disability applications.

• A lopsided industry mix.  Compared with the nation as a whole — and even with Alabama — employment in Hale County heavily skews toward farming, forestry, fishing, and manufacturing.  As we’ve noted, areas with a blue-collar industry mix (such as this one) tend to have higher rates of disability receipt than more service-oriented economies, because the work is arduous and the skills often not transferable.  One of Hale County’s main industries, catfish processing, exemplifies the kind of slippery, noisy, and physically demanding work that would be impossible for someone with severe impairments to perform.

The Robert Wood Johnson Foundation ranks Hale 65th out of 67 counties in Alabama — and even further behind national norms — on a variety of health measures.  Hale’s statistics on premature death, lack of health insurance, the number of doctors and dentists per capita, motor vehicle crashes, and even access to safe drinking water are bleak.

These facts show not just how untypical Hale County is — but how important the disability programs are in providing a safety net for some of our most vulnerable citizens.

We’ve written a lot about the Social Security Disability Insurance program, which pays modest benefits (averaging $1,100 a month) to people who have worked substantially in the past but can’t anymore because of a severe and long-lasting medical impairment.  But, in the face of continuing questions about the program, here’s something else to keep in mind:

People who collect DI are at least three times as likely to die as other people their age (see chart).

For some DI recipients, the health diagnoses are bleak:  cancer, emphysema, congestive heart failure or kidney failure.  Many other recipients’ primary diagnoses, including mental disorders and impairments that affect their bones, muscles, and joints, aren’t usually fatal by themselves — though often recipients suffer from multiple conditions that can complicate their health.

Moreover, DI beneficiaries typically have low income, limited education, and a history of poor access to the health care system.

Here’s another way to look at their mortality:  the Social Security actuaries estimate that about one-fifth of men who get DI, and nearly one-sixth of women, die within five years after they start collecting benefits.

(And an unknown, but significant, number die during the five-month waiting period, when DI benefits are unavailable and claimants must rely on sick leave, savings, help from family members, or — for the truly destitute — needs-tested Supplemental Security Income benefits.  The very sickest applicants may get fast-track consideration under the compassionate allowances program, but even that process doesn’t waive the five-month wait.)

Many new beneficiaries have costly health care needs.  DI recipients can obtain Medicare 24 months after they qualify for cash benefits, regardless of their age.  A pilot study that offered selected beneficiaries medical coverage during that normal two-year wait found that the average participant cost $30,000, and 9 percent bumped against the pilot’s $100,000 ceiling.

DI’s critics should remember that it chiefly helps older workers with severe impairments, high health care costs, limited education and skills — and high mortality.  In short, it works as policymakers intended.

National Public Radio is running a series of reports about the Social Security Disability Insurance (DI) program, as I mentioned yesterday.  One of its pieces focused on Hale County, Alabama, and alleged an unusually high receipt of disability benefits.  Other researchers have noted this geographic variation — and implied that it’s evidence of a problem-ridden program.  Not quite.

Nationwide, about 6 percent of the nation’s working-age population receive disability payments from Social Security or Supplemental Security Income (SSI), but some southern and Appalachian states have much higher rates — over 10 percent.  This disparity, though, mostly reflects a few key demographic and economic factors:

• Less-educated workforce. This is by far the most powerful factor:  states with low rates of high-school completion generally have high rates of disability receipt, as you can see by comparing the two maps below.  For older workers, SSI and Social Security disability insurance explicitly consider vocational and educational factors in determining eligibility, since less-educated people whose physical or mental impairments are so severe that they can’t do their previous work are less able to adapt to other employment than better-educated people are.

• Older workforce. The risk of disability rises sharply with age.  The typical disability insurance beneficiary is in late middle age — 70 percent are over age 50, and 30 percent are 60 or older.  New England and Appalachia have a higher median age than most of the rest of the country, which boosts their rates of disability receipt compared with the “young” Southwest and West.

• Fewer immigrants. Immigrants, especially recent arrivals, are far less likely than native-born citizens to collect disability benefits.  States with large foreign-born populations — notably California, New Jersey, Nevada, New York, Florida, and Texas — have fewer disability recipients than you’d expect based solely on their age and educational characteristics.

• Industry-based economy. States where much of the workforce is employed in forestry, mining, and manufacturing — such as the industrial Midwest and many southern and Appalachian states — tend to have more disability recipients than states with more service-oriented economies, all else being equal.  Such jobs are often physically demanding and involve skills that don’t transfer readily to other forms of work — two factors that the programs’ eligibility rules for older applicants take into account.

Some people expect other factors, such as poverty and unemployment rates, to explain the variation of disability rates across states.  But statistically, they’re less important than the four factors listed here.

In testimony today before a House Ways and Means subcommittee, CBPP Senior Fellow Kathy Ruffing explained that the expectation that the Social Security Disability Insurance (DI) trust fund will become insolvent in 2016 comes as no surprise and should not be considered evidence that the program is out of control.

Here’s an excerpt from her testimony:

While researchers cannot fully dissect all of the reasons for the program’s growth, it’s clear that the bulk of it comes from demographic factors, women’s entry into the labor force in large numbers, and the increase in the Social Security retirement age (see chart), and that the DI program’s growth will taper off in the next decade.

DI is an integral part of the Social Security program, and legislators should address it in the context of overall Social Security solvency.  The common features and interactions of DI and [the Old-Age and Survivors Insurance program] would make efforts to fix the two programs separately a mistake.

Because Social Security’s finances are fairly predictable, it is not difficult to craft revenue and benefit proposals that would place the program on a sound long-term footing.  The best proposals would protect vulnerable workers and beneficiaries and give all participants ample warning of future changes to this vital program.  That will enable them to plan their work, savings, and retirement with confidence — while continuing to count on Social Security’s protection in the event of early death or disability.

If policymakers are unable to agree on a well-rounded solvency package before DI faces depletion, they should reallocate taxes between the two programs as a stopgap, as they have done multiple times in the past, while intensifying efforts to develop a long-term solvency package that restores the program’s financial health for decades to come.

With President Obama and lawmakers of both parties vowing to achieve further deficit reduction, the stakes are high for low- and moderate-income Americans.  Moreover, as we explain in a new paper, if deficit reduction targets programs that provide supports and foster opportunity for low-income families, the adverse effects could be felt for decades — and not just by the low-income families and individuals who receive this assistance.

The economy’s future strength will depend in part on tapping the talents of as many Americans as possible.  If we shortchange investments that expand opportunity, the nation and our economy will be weaker than otherwise.  As recent data and research show, various key federal programs both ameliorate poverty in the short run and have important positive impacts over the long run.

Census data show that, as a group, programs that help families struggling to afford the basics are effective at substantially reducing the number of poor and uninsured Americans.

Overall, public programs lifted 40 million people out of poverty in 2011, including almost 9 million children (see chart).  While Social Security lifted the largest number of people overall out of poverty, the Earned Income Tax Credit (EITC) lifted the largest number of children.  Together, the EITC and Child Tax Credit (CTC) lifted 9.4 million people — including nearly 5 million children — out of poverty in 2011.

In addition, Medicaid provided access to affordable health care to more than 60 million people in 2009; thanks to Medicaid and the Children’s Health Insurance Program (CHIP), children are much less likely to be uninsured than adults.

Some leading researchers in the field have conducted a comprehensive review of the available research and data on how safety net programs affect poverty.  They found that the safety net lowers the poverty rate by about 14 percentage points (even after accounting for any potential negative effects on work incentives, which the research finds to be small).  In other words, one of every seven Americans would be poor without the safety net.  That translates into more than 40 million people.

Policymakers can make some money-saving changes in programs for low- and moderate-income individuals or families without unduly burdening those populations.  But the achievable savings through greater efficiencies in means-tested programs are modest.  In particular, the largest means-tested program — Medicaid — already provides health care coverage at a substantially lower cost per beneficiary than private coverage.

A more balanced approach to deficit reduction that includes adequate new revenues to complement additional spending cuts can further reduce deficits while maintaining the resources to invest in key building blocks of future prosperity, including effective services and supports for poor families and children.

We’ll take a closer look at how the safety net supports work and its positive long-term effects in future posts.

Click here to read the full paper.